Daily Answer Writing

Model Answer

What are Non-Performing Assets (NPAs)?

A Non-Performing Asset (NPA) refers to a loan or advance for which the principal or interest payment is overdue for more than 90 days. In India, for agricultural loans, overdue payments are determined based on cropping seasons. NPAs are further categorized into:

1. Sub-standard Assets: Loans classified as NPAs for less than 12 months.
2. Doubtful Assets: Loans classified as NPAs for over 12 months.
3. Loss Assets: Loans where loss is identified by the bank, auditors, or the RBI, but not fully written off.

As per RBI data, gross NPAs of scheduled commercial banks peaked at ₹9.5 trillion in FY19 but reduced to ₹8 trillion by September 2021.

Recent Measures to Address NPAs

1. Recognition of NPAs

• Asset Quality Review (2015): Introduced to identify NPAs transparently.
• Central Repository of Information on Large Credits (CRILC): Tracks large credits to spot early signs of borrower distress.
• Prompt Corrective Action (PCA) Framework: Strengthens banks with weak financial metrics.

2. Recapitalization of Banks

• Mission Indradhanush (2015): Infused ₹3 trillion in public sector banks to meet capital norms.
• National Asset Reconstruction Company (NARCL): Established in 2021 to acquire ₹2 lakh crore of stressed assets with a ₹30,600 crore government guarantee.

3. Insolvency Resolution

• Insolvency and Bankruptcy Code (IBC, 2016): Ensures time-bound recovery of insolvent accounts.
• Project Sashakt: Focuses on resolving high-value assets with specific strategies based on loan amounts.

4. Banking Reforms

• Enhanced credit risk management with stricter provisioning and sectoral analysis.
• Expanded RBI powers to intervene in failing banks.
• Initiated reforms in public sector banks (PSBs) with online platforms and third-party data usage.

Conclusion

The Indian government’s multi-pronged approach under the 4R strategy has improved the NPA situation, ensuring a healthier financial system. These reforms have also strengthened the banking sector’s resilience and governance structure.

Model Answer

The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 was established to enforce fiscal discipline and ensure long-term macroeconomic stability in India. The main objectives of the FRBM Act are as follows:

1. Inter-generational Equity: The government aims to maintain fiscal policies that do not burden future generations with excessive debt.
2. Macroeconomic Stability: The Act targets achieving a revenue surplus to ensure long-term economic stability.
3. Remove Fiscal Obstacles to Monetary Policy: By controlling fiscal deficits, the Act ensures that fiscal policies do not interfere with effective monetary policy by the Reserve Bank of India (RBI).
4. Effective Debt Management: The FRBM Act aims to manage India’s debt effectively by limiting deficits and borrowing.
5. Inflation Control: The Act gives the RBI flexibility to address inflationary concerns in India.
6. Equitable Debt Distribution: The goal is to ensure a more balanced distribution of India’s debt across different periods.

Key Features of the FRBM Act

The key features of the FRBM Act include:

1. Deficit Reduction Targets: The government is required to reduce fiscal and revenue deficits, with the aim of eliminating the revenue deficit by 2009 and achieving an adequate revenue surplus thereafter.
2. Expenditure Cuts: If deficits cannot be reduced through tax revenues, the government must cut expenditures.
3. Exceptional Circumstances: The Act allows for deviations from deficit targets in cases of national security threats, natural calamities, or other exceptional situations specified by the government.
4. Borrowing Limits: The government cannot borrow directly from the RBI, except for temporary advances to cover short-term cash flow issues.
5. RBI’s Role: Starting from 2006-07, the RBI is prohibited from subscribing to the primary issuance of central government securities.
6. Transparency: The government must ensure greater transparency in fiscal operations, providing three key reports to Parliament: the Medium-term Fiscal Policy Statement, Fiscal Policy Strategy Statement, and Macroeconomic Framework Statement.
7. Quarterly Reviews: A quarterly review of trends in receipts and expenditure must be submitted to both Houses of Parliament.

The NK Singh Committee, in 2016, reviewed the Act and suggested updating targets, including reducing the debt-to-GDP ratio to 60% by 2023, with 40% for the Centre and 20% for the states. It also recommended adjusting the fiscal deficit target to 2.5% by 2023, introducing a range of fiscal targets with escape clauses for emergencies.

Model Answer

Multi-Dimensional Poverty: A Comprehensive Overview

Concept of Multi-Dimensional Poverty

Multi-dimensional poverty extends beyond just income to assess deprivation across three key dimensions: living standards, education, and healthcare. This approach allows for a deeper understanding of the various challenges faced by poor individuals. The Multi-dimensional Poverty Index (MPI) provides a more effective model for identifying poverty as it utilizes data from household surveys that capture overlapping deprivations, enabling better comparisons across regions and socio-economic groups (Source: NITI Aayog, “National Multidimensional Poverty Index: Baseline Report and Dashboard”).

Measures Implemented in India

To combat multi-dimensional poverty, India has initiated a range of measures:

1. Child Mortality: Programs like the Janani Suraksha Yojana (JSY) and Janani Shishu Suraksha Karyakaram (JSSK) incentivize institutional deliveries, while the India Newborn Action Plan (INAP) aims for a “Single Digit Neonatal Mortality Rate” by 2030. Other initiatives include the Universal Immunization Programme (UIP) and the Pradhan Mantri Surakshit Matritva Abhiyan (PMSMA) for quality antenatal care (Source: Government of India, Ministry of Health and Family Welfare).
2. Nutrition: The National Nutrition Mission and the PM-POSHAN scheme target malnutrition, alongside Nutrition Rehabilitation Centres (NRCs) for treating severe acute malnutrition. The government also promotes iron and folic acid supplementation to prevent anemia among vulnerable groups (Source: National Nutrition Mission).
3. Education: Schemes such as Sarva Shiksha Abhiyan and the Mahila Samakhya Programme enhance educational access, while the New Education Policy 2020 aims for universal access to education at all levels (Source: Ministry of Education).
4. Living Standards: Initiatives like Swachh Bharat Abhiyan and Pradhan Mantri Awas Yojana focus on sanitation and housing, respectively. Clean drinking water is facilitated through the Swajal scheme, and PM Ujjwala Yojana provides clean cooking fuel (Source: Ministry of Housing and Urban Affairs; Ministry of Drinking Water and Sanitation).

To successfully address multi-dimensional poverty, continuous efforts are essential, including focusing on economic growth, agricultural development, and implementing Universal Basic Income to meet Sustainable Development Goal 1: ending poverty in all forms (Source: United Nations).

Model Answer

Decline of the Swadeshi Movement by Mid-1908

The Swadeshi Movement, which emerged from the anti-partition movement of 1905, marked a pivotal moment in the Indian National Movement. Despite its broad appeal and involvement from diverse sections of society, the movement lost momentum by mid-1908 due to several factors.

1. Government Repression

The British government responded to the growing unrest with severe repression. Public meetings, processions, and the press faced stringent controls and bans. Participating students were expelled from schools and colleges, and many activists were fined or assaulted by police. A notable example is the police crackdown during the 1906 Barisal Conference, where participants were forcibly dispersed and beaten.
Source: Historical accounts of the Swadeshi Movement.

2. Internal Conflicts

Disagreements within the Indian National Congress about the movement’s direction contributed to its decline. The split at Surat in 1907 weakened the unity of the movement, leading to fragmentation and a lack of cohesive strategy.
Source: Studies on the Surat split and its impacts.

3. Limited Nationwide Impact

While the Swadeshi Movement spread beyond Bengal, other regions of India were not fully prepared to adopt its new political strategies. The level of engagement varied significantly, limiting the movement’s effectiveness.
Source: Regional analyses of the movement’s outreach.

4. Leadership Vacuum

Significant leaders were either deported or imprisoned during this period. Key figures such as Ashwini Kumar Dutt and Tilak faced severe repercussions, while others like Bipin Chandra Pal and Aurobindo Ghosh withdrew from active politics. This lack of leadership left the movement directionless.
Source: Biographies of key leaders of the time.

5. Organizational Weakness

Although techniques like passive resistance were employed, the movement lacked centralized and disciplined organization. This disorganization hindered the effectiveness of its strategies.
Source: Research on the organizational structure of the movement.

6. Nature of Mass Movements

Mass movements often cannot maintain a constant level of intensity, especially under severe repression. A period of consolidation and regrouping is necessary to prepare for future struggles.
Source: Political theory on mass movements and their sustainability.

Conclusion

While the Swadeshi Movement faced significant challenges and ultimately lost momentum, it played a crucial role in fostering nationalism and engaging previously untouched segments of the population in the political discourse of India. Its legacy continued to influence future movements for independence.

Model Answer

What is Land Pooling?

Land pooling is a strategic approach to land acquisition where a single agency or government body consolidates smaller land parcels into a larger one. This process includes developing necessary infrastructure and returning a significant portion of the redeveloped land to the original landowners after deducting costs for the infrastructure development. Currently, this strategy is being implemented in regions like Delhi and Andhra Pradesh.

Advantages of Land Pooling

For Landowners:

1. Increased Land Value: Landowners benefit from substantial increases in land value compared to their original holdings, resulting in better financial returns.
2. Improved Infrastructure: They gain access to enhanced infrastructure, including roads, schools, and hospitals, which improves their quality of life.
3. Regularization of Land: The pooling process transforms irregular land parcels into regular plots, making them suitable for further development.
4. Sense of Belonging: By not displacing original owners, the strategy fosters a sense of attachment to their land.

For the Government:

1. No Initial Cost: The government avoids upfront payments for land acquisition, making the process economically viable.
2. Reduced Resistance: Treating landowners as stakeholders reduces resistance to land acquisition efforts.
3. Faster Development: It accelerates the traditional land acquisition process while addressing social concerns.
4. Higher Tax Revenue: Increased property values lead to a larger tax base for the government.
5. Public-Private Collaboration: The approach enhances cooperation between private developers and the government, benefiting all parties involved.

Challenges of Land Pooling

1. Consent Issues: There are ongoing debates regarding whether proper consent has been obtained from landowners, as development pressures may lead to compulsory pooling.
2. Compensation Gaps: Compensation and resettlement provisions often overlook tenant farmers and agricultural laborers, leaving them inadequately supported.
3. Legal Complexities: Inconsistencies in the legal framework complicate the acquisition process, especially in densely populated urban areas.
4. Restarting Agriculture: High costs are associated with re-establishing farming on reconstituted plots, including the need for new equipment.

Given these challenges, addressing the legal and social implications of land pooling is crucial for its success, especially in light of the provisions set forth in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement (RFCTLARR) Act, 2013 (source: Ministry of Rural Development). This act adds complexity through requirements like social impact assessments and mandatory consents, which must be effectively navigated for successful implementation.